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Suzlon to raise Rs 5,000 crore, bets on strong order flow

According to reports, country’s largest wind turbine firm Suzlon has indicated that it is hoping to restore the business to a strong position over the medium term aided by strong order books and other initiatives even as the debt-laden company is preparing to seek shareholders’ nod to raise up to Rs 5,000 crore.

“While our business performance took an enormous hit, we – by achieving our liability management goals – are now better prepared to manage today’s challenges and prepare the company to exploit tomorrow’s opportunities and restore the business to a position of strength over the medium term,” Tulsi Tanti, chairman of Suzlon said in company’s latest annual report.

He has said that the company has taken important steps on the road to recovery. A corporate debt restructuring exercise, including successfully closing a $647 million bond issue backed by State Bank of India – SBLC (stand-by letter of credit); We constructively engaged with our foreign currency convertible bond-holders with the goal of finding a comprehensive solution across the series; launched a programme to monetise non-critical assets and, introduced an aggressive initiative – ‘project transformation’ – to significantly reduce fixed costs, including manpower.

At present, the Suzlon Group is well positioned for a recovery in the medium-term with strong and firm order book of over $7.5 billion the end of May – translating to approximately 5,850 MW of new capacity, said the report. However, by the end of Q1FY14, the consolidated group order book stood at 5.36 GW, about $7.1 billion in value. Of this, $1.2 billion is from India while the rest is from global markets.

The company management has decided to focus on seven priority areas in a bid to resume its growth trajectory. They include achieving working capital optimisation, disposing of non-critical assets and reduce debt, reducing fixed costs by right sizing organisation and focus on core and profitable markets, among others.

Suzlon’s consolidated revenues stood at Rs 3,851 crore in Q1FY14 as against Rs 4,747 crore in Q1FY13. Net loss for the period widened to Rs 1,059 crore from Rs 849 crore in the first quarter of previous financial year. Its consolidated net debt stood at Rs 13,705 crore as of Q1FY14 when compared with Rs 13,017 crore in a year-ago period.

Meanwhile, Suzlon will also seek shareholders’ approval in the ensuing annual general meeting of the company for issuing equity or equity related instruments to the extent of Rs 5,000 crore to meet its fund requirements. It intends to raise funds through issue of equity shares, American depository receipts (ADR), global depository receipts (GDR), non-convertible debentures, convertible debentures, foreign currency convertible bond (FCCB), or qualified institutional placement (QIP).

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